The 162(m) Transition Rule Guidance Has Arrived

On August 21, 2018, the IRS released Notice 2018-68 providing its initial guidance on the Tax Cuts and Jobs Act (Act) transition rule for changes under 162(m).  Before the Act, 162(m) limited a public company’s tax deduction to $1,000,000 for annual compensation paid to its “covered employees” (i.e., the CEO and the other three most highly compensated executives (excluding the CFO)).  Important pre-Act limitations/exceptions to this rule included (i) a more narrow definition of covered employee, and (ii) an exclusion for performance-based compensation.

The Act substantially broadened the definition of covered employee and eliminated the performance-based compensation exception. However, the Act offered a transition rule for compensation paid under a written binding contract that was in effect on November 2, 2017 and that is not materially modified after that date. Read More ›

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IRS Announces Reduction in Family HSA Contribution Limit for 2018

In Revenue Procedure 2018-18, the Internal Revenue Service announced a reduction in the HSA contribution limit for family coverage in 2018 to $6,850 from $6,900.  The self-only HSA contribution limit for 2018 remains unchanged at $3,450.

This change is a technical result of the Tax Cuts and Jobs Act, which adjusted the method for calculating inflation. Although the reduction may appear somewhat small, it may cause certain employees to inadvertently contribute over the limit.  For instance, an employee who front-loads his or her annual contribution may have already exceeded the new limit.

The IRS has not issued any transition relief for excess contributions made in 2018 by employees relying on the original contribution limit announced in Revenue Procedure 2017-37Read More ›

Posted in Employee Benefits, Health & Welfare Plans, Health Care Reform | Tagged , , , , , ,

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